Resources

Agreement of Levy Scheme for 2014/15 and Four-Year Arrangement Between Racing and Major Bookmakers

24/10/2013 - Agreement of Levy Scheme for 2014/15 and Four-Year Arrangement Between Racing and Major Bookmakers

Printer Friendly

The terms of the 53rd Levy Scheme (1st April 2014 to 31st March 2015) have been agreed, with Horserace Betting Levy Board members approving unanimously the Recommendations from the Bookmakers’ Committee.

The Bookmakers’ Committee estimates that the 53rd Levy Scheme, including Betfair’s estimated £7.8m contribution to British Racing, will yield £75.7m.

The Bookmakers’ Committee also now estimates that the current (52nd) Levy Scheme in 2013/14, inclusive of Betfair’s contribution, will yield £75.6m, up from the £72.9m when its Recommendations for the 52nd Levy Scheme were approved by the Board in October 2012.

In addition to the agreement of the 53rd Levy Scheme, the four largest retail bookmakers (William Hill, Ladbrokes, Coral and Betfred) have agreed a four-year undertaking with Racing (the British Horseracing Authority, the Racecourse Association and the Horsemen’s Group) to make additional voluntary contributions of £4.5m per year into a newly-created Incentive Fund with effect from April 2014.

This £18m Incentive Fund will be managed by a new distribution group comprised of representatives of the Levy Board, Racing and the four contributing bookmakers and it will advise the Board on how best to distribute the funds to deliver a more competitive British racing product and a growth in Levy.

As part of the arrangement, the four bookmakers have agreed to underwrite a combined contribution payable through the statutory Levy of not less than £47.5m per year, as well as the £4.5m additional voluntary contributions.

Total income to the Levy Board from bookmakers in 2014/15 is estimated to reach £80.2m, including Betfair’s £7.8m and the £4.5m additional voluntary contributions.

A statement on behalf of William Hill, Ladbrokes, Coral and Betfred said:

“We are delighted to have reached an arrangement with Racing, which will see the biggest four bookmakers in Britain inject an additional £18m into British Racing over the next four years. This addition to our normal statutory Levy payments will ensure that the four companies underwrite a minimum £52m per year to the Levy Board. British Racing is a core product in our betting offices and we want to see it grow and thrive. The £18m will be used to improve the competitiveness of the racing product, making it more appealing to both racegoers and betting office customers alike. We look forward to working closely with our colleagues from Racing over the next four years and maintaining, and enhancing, Britain’s status as the number one horseracing nation in the world”.

“This arrangement has the support of the principal organisations in the sport, including the Racecourse Association and Horsemen’s Group, and represents a positive step forwards in the prevailing circumstances. We are pleased to reach an early Levy settlement, and in turn trigger a significant additional voluntary contribution from the big four retail operators for the next four years. This additional funding, coupled with a continuation of the underwrite, brings a degree of certainty and considerable upside in the coming years, and we would like to place on record our appreciation towards the big four bookmakers and the Levy Board in helping us reach this arrangement.

“Importantly, the arrangement places the emphasis on joint efforts with the betting industry to make the Racing product even more compelling, and competitive year-round. We look forward to working with the big four bookmakers to put the new Incentive Fund to best use, and grow Levy income further.”

Paul Lee, Chairman of the Levy Board, said:

“I am extremely pleased at the agreement of the 53rd Levy Scheme and of the multi-year arrangement between Racing and four major bookmakers. These will provide a platform for certainty of income, stability and continuity. All parties involved recognise the importance of the success of British Racing and the benefits of investing in it. The Levy Board will continue to play a constructive role in ensuring that funding is deployed so as to maximise benefits to Racing and Betting, including through the optimum scheduling of fixtures. I am very hopeful that the degree of accord evident in today’s announcement will provide the basis for positive discussions on a range of issues in the future.”

Will Roseff, Chairman of the Bookmakers’ Committee, said:

“We are pleased that the Committee’s recommendations for the 53rd Levy Scheme have received the unanimous endorsement of all members of the Levy Board in advance of the statutory deadline of 31st October. I am delighted that the Committee, representing all bookmakers large and small, was able to agree a Scheme that is acceptable to all the members of the Committee, despite the bookmaking industry continuing to operate in a challenging trading environment.”

For further information on the 53rd Levy Scheme agreement, please contact Alan Delmonte, Chief Executive of the Levy Board, on 020 7802 3892 or 07931 701536.

Notes

53rd Levy Scheme : Key Aspects

The 53rd Levy Scheme will in most respects continue the terms of the 52nd Levy Scheme with a headline rate of Levy at 10.75% of bookmakers’ gross profits on British racing, and with uprating for inflation the thresholds applicable to Licensed Betting Offices (LBOs) and the fixed-sum payments in certain other categories.

The details of the 53rd Levy Scheme (and the corresponding details for the 52nd Levy Scheme) are as follows:

(a)Licensed Betting Offices

Each LBO will pay 10.75% of its gross profits on British Horserace Betting Business (BHBB). For an operator with 100 or fewer LBOs, an abated rate will apply to those of its LBOs (up to a maximum of 30) which have gross profits on BHBB of less than £55,860. Operators with more than 100 LBOs will pay at the full 10.75% rate on each outlet.

Each telephone and/or internet operator will pay 10.75% of its gross profits on BHBB.

(52nd Levy Scheme : 10.75%)

(c)Spread Betting

Each spread betting operator will pay 2.15% of its gross profits on BHBB.

(52nd Levy Scheme: 2.15%)

(d)Betting Exchanges

Each bet-broker including betting exchanges will pay on a basis equivalent to 10.75% of its gross profits, defined as gross commission on BHBB deducted from the winnings paid out to bettors and bet-takers.

A Flat Rate Rebate of £758 for the first 30 LBOs in any chain and £191 for all other LBOs will be applied. This will be a sum deducted from the bookmaker’s 53rd Levy Scheme liability during the year-end reconciliation.

(52nd Levy Scheme : Flat Rate Rebate £735 for first 30 LBOs in any chain and £185 for all other LBOs)